Key points of investment
Performance summary: In 2023, the company's revenue was 11.30 billion yuan, +48% year over year; net profit to mother was 2,676 billion yuan, +142% year over year; after deducting non-net profit of 2.47 billion yuan, +40% year over year, profits are in line with the performance forecast. 2024Q1, the company's revenue was 2.68 billion yuan, +26% year on year; net profit to mother was 713 million yuan, -42% year on year; net profit after deducted non-net profit was 691 million yuan, -36% year on year.
Q1 Net profit from the main business or an increase of more than 100%: Of the net profit attributable to mother of 2023Q1, investment income (mainly from real estate companies) and asset disposal income were high. After deducting non-return net profit, the company's net profit from the main business in 2024Q1 was 650 million yuan, an increase of 114% over 2023Q1 of 300 million yuan.
The implementation of rent increases in the market is expected to help the company achieve long-term continuous growth. The company adjusted rents for maturing positions in the market at the end of the 2023 period, with an average increase of 5.5%. In the future, the company will introduce an evaluation system in conjunction with the Yiwu Index to construct a differentiated rent pricing model based on indicators such as China's GDP growth rate, market-based rent price fluctuations, and market sentiment index. The growth rate is expected to be no less than 5% over the next 3 years. Market management (mainly rental income) is an important source of profit for the company, contributing 74% of gross profit in 2023; due to a certain price difference between the rent collected by the company and the market-based rental price, there is room for rent increases. As rents increase in the future, the company's main business profit is expected to continue to grow.
Yiwu's export boom is high, laying a good foundation for the company's further growth. From January to February 2024, Yiwu's total import and export value reached 116.6 billion yuan, +47.3% year-on-year, of which exports amounted to 102.77 billion yuan, +41% year-on-year. The Belt and Road countries experienced high growth, totaling 75.9 billion yuan in exports, +56.6% over the same period last year. Yiwu's import and export trade is booming. The average daily passenger traffic of the 2024Q1 Yiwu International Trade City exceeds 210,000, and the average number of foreign investors per day is 3,523, +160% over the same period last year.
New businesses are developing rapidly, and data resources are being tabulated. 2024Q1's Chinagoods platform added GMV of 11 billion yuan in 2024Q1, +37.5% year-on-year; yiwupay completed more than 6.2 billion yuan in cross-border transactions. In 2024, the company will continue to expand investment related to data elements. At the end of the first quarter, the amount of intangible assets-data resources that the company can confirm exceeded 8 million yuan.
The new business is expected to create the company's second curve. As the company explores the monetization of data resources, it is also expected to contribute to profit growth in the future.
Release the “Improve Quality, Increase Efficiency, and Value Return” action plan: The company plans to continuously increase the proportion of profits distributed in cash within three years from 2024; establish and improve the company's long-term incentive and restraint mechanism through equity incentives and other methods to achieve a win-win situation for the company, employees and shareholders.
Profit forecast and investment rating: Benefiting from rent increases and high growth in new business, we raised the company's net profit forecast for 2024-25 from $30.0/ $3.33 billion to $31.2/ $3.52 billion. The net profit forecast for 2025 was $4.0 billion, corresponding to the PE ratio of 15/13/ 12 times on April 17, maintaining the “buy” rating.
Risk warning: New market construction and new business development fall short of expectations, weak external demand, etc.